Without understanding the myriad of positive effects of AB811 / PACE, and living in constant fear of a repeat of the implosion that we are experiencing as a result of the "Era of Unbridled Housing Leverage" that helped bring our country into this Not So Great Depression, the Federal Housing Finance Agency (FHFA) has stepped forward (July 9, 2010) in their role as Moderator and halted all lending through these programs. 

The crux of the problem, in the eyes of Fannie and Freddie, is that the loan is senior to the home mortgage. In a foreclosure process, the energy efficient loan is paid off before the mortgage lender gets their money back. What they don't seem to understand is that the financing structure was implemented with other types of specialty property taxes in mind. Other property tax assessments for municipal improvements (i.e. sewers and sidewalks via Mello Roos) are senior to home mortgages and have not raised red flags from mortgage lenders in the past.

The application process here in Palm Desert began showing strangulation of the spirit of the program as we entered this last lending phase.  We see clearly now that our local program was actually just preparing to go lock step with what the requirements that the Fed's were hinting at to allow the PACE to flourish nationwide.  And since the US Treasury Department is the true Overseer of PACE they called the halting of such programs until the FHFA could structure the rules. And the rules that we operate by in Palm Desert are nearly identical to the rules that the FHFA are hinting at making standard in the PACE.  As stated earlier, strangulation. 

When the smoke clears there will be a nationwide program (PACE) founded on the principles of first and foremost protecting quasi-governmental lending agencies and not promoting the financing of energy efficiency and renewable energy integration.  Three years from now banks will begin to finance the PACE to generate revenue on their private capital.

The Existing Rules. Simply Put:

1.  Low interest rate loan up to $30,000 (so far at 7% amortized over 20 years) with no documentation approval by property Lender (if there is any) from the City...attached to your property that resides within that city's limits and to be paid every six months through / along with your County property tax payment;

2.  Earmarked ONLY for and covers MOST energy efficiencies and renewable energies available to the public;

3.  Requires NO credit check and can pass to new owners of property without future credit checks through title transfer at escrow.

More Specifically:

With the passage of AB 811, residents of Palm Desert are the first in the nation to be able to finance the installation of energy efficiency improvements and distributed generation, renewable energy sources that are permanently fixed to real property within the City with low interest loans which can be repaid in up to 20 years on property taxes.

AB 811 / PACE - What's in it for you?

·                You, as the owner of residential or commercial real property, immediately enjoy a   greatly reduced electric bill with no out-of-pocket expense to you;

·                If you sell your home or business, the new buyer can assume the payments, as you benefit from the increased equity at sale;

·                Loans have a minimum of $5,000 and limit of a Loan to Value of 10% of Property Value up to $30,000 without Lender approval and up to $100,000 if no Lender;

·                Loans are not subject to credit ratings or credit checks;

·                The interest rate is fixed at or near 7% and paid bi-annually through your property tax;

·                Loans can be used on a variety of energy efficiency improvements and the materials and labor required to install them properly. Efficiencies now include:

o   air conditioning and ventilation systems,

o   pool pumps,

o   energy efficient windows, doors and skylights,

o   window films,

o   tank less water heating equipment,

o   white -roofs and coatings.

·         Renewable energy sources include:

o   solar systems

o   gas fired, fossil fuel burning fuel cells.

Palm Desert has set the pace statewide in the implementation of energy efficiencies and renewable energy conversions by approving and implementing Assembly Bill 811. Prior to the FHFA seizure the City has been successfully taking applications since August 28, 2008. We were on our third official phase of funding. 

The spirit of this program was to allow property owners to use their personal real estate holdings to apply for a loan for any energy efficient measure which is permanently attached to that property, including solar PV, high efficiency heating and air conditioning systems, efficient pool pumps, windows, and much more. Please refer to the following links for more information:

·                      Summary of Loan Process

·                      AB811 Admin Guidelines

·                      EIP Loan Application

·                      EIP Consent Letter

·                      Consent Agreement

·                      AB811 Loan Agreement

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